Low Poly

Low poly refers to the mesh which has small (low) number of polygons.

Problem

Typically organic things, like trees, people, animals, require a lot of curved surfaces and since OpenGL thinks in triangles - we need a lot of very-very small triangles to create a believeable curved surface. It might be tens of millions of triangles needed to draw a single human, but average card can handle about a million. And you need to show more than 1 person in game. Therefore there has been developed a number of tricks to develop a low polygon count models that look realistic.

Low poly from high poly

Typically you can model "high poly" object and then retopologize it to "low poly" PLUS normal map. That creates illusion of additional faces, when in fact model stays low poly. The process is typically 3DS max/Maya/Blender -> Zbrush/Mudbox -> Topogun.

Alternative approach is to model low polygonal model and then adding details via DRAWING (in 2D app, like Photoshop) a normal map.